Witness: Corzine knew that customer funds flew

posted at 10:55 am on December 14, 2011 by Ed Morrissey

Last week, Jon Corzine testified before Congress that he had no idea that the company he ran into the ground, MF Global, had borrowed money from customer accounts. Corzine might end up wishing that he’d just taken the Fifth instead. A witness directly contradicted his claim in Senate testimony yesterday, saying that Corzine not only knew about the raids on customer accounts, he ordered at least one of them himself:

The head of the private exchange tasked with overseeing MF Global said Tuesday that Jon Corzine may have been aware of a transfer of client funds from the firm he formerly led, possibly contradicting the former governor and senator’s statements under oath that he had no knowledge of the events that resulted in the disappearance of $1.2 billion in customer funds.

In a hearing before the Senate Committee on Agriculture, Nutrition and Forestry, Terrence A. Duffy, the chief executive of CME Group, said a senior female executive of MF Global told a CME auditor that Corzine — the former chief executive officer and chairman of the firm — was aware of a $175 million loan of customer money to a European affiliate of the now-bankrupt commodities brokerage.

“Mr. Corzine was aware because our employee had heard this, on the phone—‘Send back 175’ — and said he was aware of this loan,” Duffy told the Senate committee. …

Duffy didn’t elaborate on the exact nature of the $175 million loan that Corzine had allegedly known of, or whether that specific loan was among those that were illegal and improper. Futures firms are required to segregate customer money from the firm’s own funds, though there are circumstances under which moving customer money is permitted, provided there is sufficient collateral.

“The only thing I can tell you [is] that MF Global transferred customer money to its broker dealer, and that Mr. Corzine was aware of the loans being made from segregated accounts,” he said. When asked for elaboration, a CME spokesman said the firm would not comment beyond the remarks Duffy made at the hearing.

If that testimony holds up, Corzine has just set himself up for a perjury charge on top of his other woes. That is a materially false statement of a kind that demands perjury prosecution; the entire point of the hearing was to determine how customers lost $1.2 billion in the collapse. Giving knowingly-false testimony under oath to Congress could add several years to whatever sentence Corzine eventually gets.

Following another boring day of hemming and hewing, during which Corzine repeatedly exhibited unbearable amnesia and said he had no knowledge of virtually anything until Sunday night, here comes the CME Executive Chairman Terry Duffy, under oath, with what Roberts said “is a bomb” statement which basically says that Corzine lied under oath. Specifically, according to Duffy’s remarks during the Q&A, an MF Global employee, a woman, advised the CME that Corzine had been aware of a $175 million loan made to Euro affiliates just days prior to the bankruptcy: a loan which effectively was that of commingled customer accounts, and more importantly a refutation of previous statement under oath by the man who was “financial advisor” to none other than the vice president of the United States who said he did not know about this until late on Sunday. This was not in his prepared testimony.

This is why defense attorneys try to get their clients to take the Fifth in any hearing that comes before prosecutions. It’s too easy to get tripped up by hostile questioners even if one isn’t intending to offer false and/or misleading testimony. Taking the Fifth looks bad politically, but at the point where a client is facing a big SEC investigation, Congress is holding hearings, and over a billion dollars has gone missing, a competent defense attorney — or even one just out of law school — knows that the client’s political life is over anyway.

If confirmed, will this change the media coverage of Corzine and the MF Global scandal? Two of the three broadcast networks have avoided even mentioning that the former New Jersey governor and US Senator is a Democrat, and no one else is bothering to mention that Corzine was one of Obama’s biggest bundlers in this cycle, as well as Obama’s liaison to Wall Street for ginning up big bucks for the re-election campaign. I seem to recall the media getting into a lather over Ken Lay’s much less concrete connections to George W. Bush after Enron’s collapse.

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Comments

Isn’t he the charmer who thought fat commercials about Christie were hilarious? Not often do we glimpse Karma’s perfect storm: for the nasty, corrupt little Lefty, a perp walk with a 400 lb roommate known only as Maybelline at the end.

What a liar! Corzine promised Gov-elect Christie that he would not spend $$ as he left office. In the final hours before Christie was inaugurated, Corzine sent out millions (or billions) to democrats. Now Corzine says he doesn’t know what happened. How could anyone believe him?

This case is the canary in the coal mine. If Corzine walks free on this then what chance do any of us have. As long as you belong to the right party and have the right friends then kiss your life’s savings good bye.

Corzine and MF were using customer money to place huge bets by transferring their accounts to a UK subsidiary where there is no statutory restriction on the use of customer funds as collateral in a derivative of the sort MF was buying.

He knows where all of the money is, all $1.2 billion. It is gone. What is sad, is that he probably didn’t even break the law thanks to the UK loophole and his customers agreed to the transfers even if it was buried in the fine print.

possibly contradicting the former governor and senator’s statements under oath that he had no knowledge of the events that resulted in the disappearance of $1.2 billion in customer funds.

What a polite way to say that Corzine may well have committed perjury. When this is all over Corzine is going to make Bernie Madoff look like a saint. In the meantime I wonder how much of the money Corzine plundered from his firm ended up in the hands of Obama and his supporters.

I’m totally shocked that a liberal would lie.
I think they should waterboard the [email protected]@rd!
Let him out in the public, and let us pummel him!
Bet that hundreds of millions will show up in TV ads this year, and….. certain pockets

The United States as we know it will no longer exist if we can’t get the votes to oust every corrupt Democrat out of office. obama,corzine,holder,and the lot are the result of a Godless society and we will all be judged by their actions. Pray for our Children and Grandchildren.

The only possible conclusion is that Corzine is either lying (he was in fact aware of the misapplication of client funds) or grossly incompetent (he was unaware or kept himself willfully ignorant of these transactions). Which one?

If confirmed, will this change the media coverage of Corzine and the MF Global scandal?

No.

But that’s why the GOP, NRSC, and every single GOP candidate should have an ad having Biden state how he & Obama called Corzine because “He’s the smartest guy they know…” right after Obama was elected, how Corzine appears to have lied, and how Corzine is a member & symptom of the 1%… Over and over and over and over and over and over and over and over and over again.

Like I said yesterday, there is no way Corzine didn’t know what was going on in his own company. If customer funds were used in any illegal manner, he would know about it and would either say yea or nay.

You cannot be a CEO of a financial house and not know the day-to-day of millions of dollars being transacted. Successful companies aren’t made from the incompetence of clueless CEOs. Idiots don’t get paid millions of dollars to stand by while a company either sinks or swims. Freddie and Fannie say they have to offer big salaries to qualified execs who can turn a company’s problems around in order to attract those smart people in the first place.

Goldman Sachs prides itself on making millions for their customers and improving its own bottom line. You can’t be successful on Wall Street without being able to account for every dollar you’re making or trading. How then, can anyone in a position of leadership at these companies then say they had no idea that funds were shadily transferred, or that heavily leveraged debt wasn’t on their radar?

They can’t. Corzine knew exactly what he was doing every step of the way, and if his bets on European debt had paid off in time, you can be sure he and MF Global would have crowed about their success from the rooftops.

I just hope the only investors hurt were the libs that invested with him. The guy is a total crook, very deserving of jail time, except he is a leftist. What a quandary, if in fact the majority of investors were libs. Either way I’m sure Soro’s does well.

Bmore on December 14, 2011 at 11:15 AM

The investors hurt were farmers and ranchers, among others. Farmers trying to protect their selling price for next fall’s harvest.

I know of two regional grain trading companies (i.e., local grain elevators that help their customers hedge crops) who lost $6 million and $10 million. They have gotten 72% of it back right now (as of yesterday), but don’t know if more is coming back or not.